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Only the Generators (>100 MW) bid into the POOL to supply electricity e.g. National Power (now Innogy), PowerGen etc (В торгах POOL принимали участие только производители (>100 MW), таки как Национальная Энергетика (теперь Innogy), Powergen и т.д.) The National Grid Company published projected demands for the following day and invited bids (Национальная сетевая Компания выдавала данные по спросу на следующий день и инициировала торги) The Generators supplied bids for each generating set in each station for each half-hour period of the following day (Производители снабжали заявки на каждой станции для каждого получасового периода следующего дня) The NGC sorted bids to determine which generating sets would be used for each particular period, and which ones would have capacity made available (NGC классифицировало заявки по каждому периоду The Operation of The Electricity Pool: 1990 – 2001 Функционирование Электрического Пула: 1990-2001

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Bid from company B £19.31 per MWh Bid from company A £19.20 per MWh (0.96R / kWh) Bid from company D £19.40 per MWh Bid from company E £19.50 per MWh Bid from company C £19.32 per MWh Range of bids from companies in range £18 - £19 per MWh 0.90 - 0.95 Roubles per kWh Range of bids from companies in range £15 - £18 per MWh 0.75 - 0.9 Roubles per kWh Range of bids from companies in range
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20
All Companies who were successful were paid the SMP for all units generated irrespective of what their bid was (Все Компании, успешно оплатившие SMP независимо от цели заявки ) The bids were for the single half-hour period and fresh bids were required for all half hour periods (Заявки были на отдельные получасовые периоды и новый запрос делался каждые пол часа) It was possible for companies to bid £0 and this would guarantee that they generated and paid SMP (Было достаточно подать нулевую заявку и это гарантировало выработку и выплату SMP) –However, if all Companies did the same they would have to generate electricity for nothing (Хотя если бы так поступали все компании электричество вырабатывалось бы в пустую) In addition to the SMP, there was also a capacity charge relating to the generating capacity which was requested to be available The Operation of The Electricity Pool Работа электрического Пула

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Capacity Charge paid to all Generators who had been requested to have capacity available. -based on formula(по формуле): LOLP * (VOLL - SMP) Loss of Load Probability The Operation of The Electricity Pool VOLL: was set by the Regulator at around £2400 per MWH (Была установлена Регулятором примерно около 120 Roubles за 1 kWh) LOLP: normally a very low figure but could become significant if there was a shortfall in generating capacity (обычно незначительная цифра может стать важной если наблюдается дефицит выработки) Capacity Charge: signal to ensure sufficient capacity was available. Pool Input Price (PIP) = SMP + LOLP * (VOLL - SMP) Value of Lost Load

23
Электрический пул: A Review Need for strong Regulatory Body to ensure prices were not fixed. Evidence suggested price manipulation took place in early years. Regulator required major generators to dispose of some stations. The lack of Demand Side Bidding was a weakness Charges for Transmission Losses were averaged over whole Network. Customers in North subsidise those in South Generators in South subsidise those in North These issues are still under discussion Separate discussions relating to Distribution Charges are also under way

27
The basic principles [ Основные принципы] Новая система оптовой торговли НЕТА How does it differ from the Pool? Both Generating and Demand Side Bidding Takes Place Most Electricity (>90%) is traded outside NETA Balancing Mechanism NETA favours generators and suppliers who can guarantee specific levels of generation/supply in advance. NETA favours generators and suppliers who can guarantee flexibility in output / demand at short notice.

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The basic principles [ Основные принципы] Новая система оптовой торговли НЕТА How does it differ from the Pool? - continued Generators and Suppliers are penalised if they deviate from their agreed level of generation / supply. System security is maintained via the Balancing Mechanism [Балансирующий механизм] Renewable Generators e.g. Wind and small CHP (~10 MW) can be adversely affected.

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The basic principles [ Основные принципы] Generation and Supply focuses on Новая система оптовой торговли НЕТА Balancing Mechanism [Балансирующий механизм] (BM) Units Generating BM Units may be a single generating set or a collection of small generating sets. Demand BM Units may be a single large demand consumer or a collection of small consumers. Trading can take place between Generating and Demand BM Units Only the volume traded ( not price) has to be notified.

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The New Electricity Trading Arrangements Each Generating or Demand BM Unit notifies System Operator of the projected Volume of Electricity to be Traded for each half hour period by 11:00 on preceding day. Initial Physical Notification (IPN) System Operator checks sufficient capacity is available. Initially 3.5 hours before REAL Time - later reduced to 1 hour. Final agreed Volumes to be traded noted before Gate Closure. Final Physical Notification (FPN) окончательная физическая нотификация Gate Closure and Final Physical Notification Закрытие периода и окончательная физическая нотификация GATE CLOSURE : Закрытие периода

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The Balancing Mechanism Балансирующий механизм Day Before Current Day IPNFPN Gate Closure Real Time 30 mins 3.5 hours 1 hour Operation of Balancing Mechanism Summary Changes to contract position cannot be made after Gate Closure The Balancing Mechanism is operated after Gate Closure to provide System Security

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The Balancing Mechanism Балансирующий механизм The New Electricity Trading Arrangements Новая система оптовой торговли НЕТА To allow system to remain stable Too little electricity on the system – Generators can OFFER to INCREASE output – Suppliers can OFFER to REDUCE consumption Time FPN OFFER Time FPN OFFER If OFFER is agreed then Generators / Suppliers are PAID for any electricity increased / reduced under the OFFER.

33
The Balancing Mechanism Балансирующий механизм The New Electricity Trading Arrangements Новая система оптовой торговли НЕТА Too much electricity on the system – Generators can BID to REDUCE output – Suppliers can BID to INCREASE consumption If BID is agreed then Generators / Suppliers PAY for any reduction in generation / increase in demand under the BID. Time FPN OFFER Bid FPN OFFER Bid Time

36
Новая система оптовой торговли НЕТА What happens if a Generator / Supplier is out of balance? Unexpected changes in Demand Equipment Failure Generator / Supplier has too much electricity on the system [too much generation / too little demand] * charged for imbalance at System Sell Price Generator / Supplier has too little electricity on the system [too little generation / too much demand] * charged for imbalance at System Buy Price Example from last February

37
Новая система оптовой торговли НЕТА How well has it performed since starting on 27th March 2001? In last 18 months wholesale prices have risen and are now higher than at start of NETA

38
Новая система оптовой торговли НЕТА How well has it performed since starting on 27th March 2001? From ELEXON Web Site: 3rd July 2003 2001 2002 2003

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The Supply of Electricity since 1990 Сбыт электроэнергии с 1990 Large Consumers (> 1 MW) Крупные потребители Before privatisation: Could only purchase from the Local\Regional Electricity Company (REC) supplier in their region After privatisation Consumers > 1MW could purchase from ANY REC not just their own regional Company (second tier RECs). From 1994 Consumers > 100 kW were included in Deregulation

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Domestic Consumers: Бытовые потребители (население) The Supply of Electricity since 1990 Сбыт электроэнергии с 1990 Domestic Consumers did not benefit from competition until September 1998. Prices to Domestic Consumers were regulated according to the formula: RPI - X + E + F Transition Arrangements to 1998 Договоры о переходном периоде на период до 1998 RPI is a measure of inflation X was a factor set by Regulator - initially ~ 5% but later reduced. E was an energy conservation factor whereby costs of such measures could be passed on to the consumer F was a levy designed to promote exploitation of Renewables

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Domestic Consumers: Бытовые потребители (население) September 1998 - June 1999 The Supply of Electricity since 1990 Сбыт электроэнергии с 1990 Regions of England and Wales were progressively Deregulated so that Domestic Consumers could purchase their electricity from any supplier. Implementation of Deregulation in stages: allowed any initial problems encountered to be sorted out. After Deregulation, the RPI - X + E + F formula no longer applied. To allow new suppliers to gain a foothold, the existing suppliers could not reduce their prices in their own area for a further transition period of a few years.

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The unit charge to the consumer has three components. The actual unit charge as determined by the Supplier A distribution charge (payable to local REC as distributing company) which is same for all suppliers in a region A meter reading charge. The domestic consumer does not see these different component parts on their bills. Электрический пул: Supply Side Domestic Consumers: Бытовые потребители (население) Tariff Structure: Структура тарификации

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Changes in Structure of Supplies Companies in last 4 years Electricité de France (EDF) acquire London and SEEBOARD Only in Scotland has their been no change in ownership PowerGen acquires Eastern (TXU) EDF acquire SWEB nPower acquires Yorkshire Scottish and Southern acquire SWALEC nPower acquire Northern PowerGen acquire NORWEB

47
Since April 1st 2002, all suppliers must provide a minimum percentage of electricity from renewable sources. The percentage is set to increase each year to 10.4% by 2010. Compliance is indicated by Renewable Obligation Certificates. Failure to meet this requirement incurs a fine at the Buy-out price - initial 3p per kWh (1.5 Roubles per kWh) and rising in line with inflation - currently 3.129p per kWh. But-out fines are recycled to companies in proportion to ROCs they hold - thus trading is occuring in ROCs at a surcharge price as high as 4.8p per kWh (2.4 Roubles). Domestic prices are set to rise slightly because of this Renewable Obligation. Электрический пул: Supply Side Impact on Suppliers of Renewables Obligation Certificates (ROCs) Воздействие Сертификатов обязательства по использованию возобновляемых источников

50
OFGEM controls the prices charged by National Grid (Transco) and the Distribution Companies These are natural monopolies. Transmission and distribution make up around 25-30 per cent of the average domestic bill. BUT OFGEM also has a duty to ensure the companies can finance investment needed to rewire Britain. Rewiring is necessary with increased use of Renewables. The Regulator

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Energywatch: set up by the Utilities Act (2000). Funded by Department of Trade and Industry Funding comes from the licence fee paid by all energy companies It looks after consumers interests and deals with complaints Energywatch is accountable to the DTI. Energywatch is separate from OFGEM. Two organisations work closely together. Relationship with OFGEM is set out in a Memorandum of Understanding. Consumer Protection

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Energywatch: Some key projects currently underway by Energywatch: Dealing with Rogue Traders who try to get people to switch suppliers Dealing with late and inaccurate bills In 2002/2003 Energywatch had 45,546 account, billing and other complaints (up from 37,075)* 34,027 transfer complaints (up from 30,743)* 12,960 direct selling complaints (up from 6,991)* Consumer Protection

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Metering Specialist Metering Companies have entered market since 1998. Siemens Energy Services is now the largest independent supplier of metering services. It reads gas and electricity meters throughout the UK Processes customer data and handles the payment of bills. Siemens covers nearly 8 million households (around one-third) It provides a metering service for British Gas, Powergen, npower, Scottish Power, Scottish & Southern Energy.

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Conclusions (1) Key Changes in Electricity Market in UK April 1st 1990: Privatisation: Electricity POOL Established Large Consumers benefit from Deregulation 1994: Intermediate Consumers benefit from Deregulation 1998 + All Consumers benefit from Deregulation 27th March 2001: NETA replaced POOL 1st April 2002: Renewable Obligation comes into force The POOL and NETA were not used in Scotland The Future BETTA (British Electricity Transmission and Trading Arrangements). It is planned to extend NETA to include Scotland in April 2005 (recently put back from October 2004)

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Conclusions (2) Key Changes in Electricity Market in UK Prices to consumers have fallen as a result of Deregulation (up to 20% in some cases) Wholesale prices of Electricity have fallen by 40% over last 4 years, and 20% since introduction of NETA Prices to consumers have changed little since introduction of NETA - to early to see full effect as prices by Suppliers only tend to change once a year or so. Most electricity >> 90% is traded outside Balancing Mechanism Trading NETA favours Generators / Suppliers who can guarantee output / supply in advance NETA favours Generators / Suppliers who can be flexible to make adjustments during Balancing Mechanism Trading.

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Conclusions (3) There is a need for A strong Regulator with Powers to curtail malpractice A Consumer Watchdog to deal with Complaints etc. New companies are emerging in the market Metering Companies Distribution only Companies Significant changes in structure Mergers / Demergers Vertical Integration / Splitting of functions

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The changing face of the Electricity Market in the UK Изменяющееся лицо рынка электроэнергии в Британии Some Useful WEB Sites www.bmreports.com/ : Up to date information of NETA Market www.ofgem.gov.uk/ : The UK Regulator www.elexon.co.uk/ : Documents and Modifications to NETA www.nationalgrid.com/uk/ : The System Operator www.energywatch.org.uk/ : Energy Watch www2.env.uea.ac.uk/gmmc/energy/enpoint.htm the Energy Web Page at UEA giving links to many Energy Web Sites in UK and overseas. This presentation is available over Internet at www2.env.uea.ac.uk/gmmc/neta/NETA.htm